Principles of Economics
7th Edition
ISBN: 9781305156043
Author: N. Gregory Mankiw
Publisher: Cengage Learning US
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Chapter 32, Problem 4QCMC
To determine
The impact of removing the export ban on exchange rate.
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D7)
Suppose the exchange rate between the South African Rand (R) and the United States Dollar ($) changed from R10 per $1 to R15 per $1. If domestic prices remain the same, what would be the effect of this situation on the Rand and South Africa's imports?
Select one:
a. A depreciation of the Rand, making South African imports from the United States more expensive
b. A depreciation of the Rand, making South African imports from the United States cheaper
c. The Rand would buy three times more goods than before the change occurred
d. Appreciation of the Rand, making South African imports from the United States cheaper..
Consider a small country that exports steel. Suppose that a “pro-trade” government decides to subsidize the export of steel by paying a certain amount for each ton sold abroad. How does this export subsidy (similar to a tariff) affect the domestic price of steel, the quantity of steel produced, the quantity of steel consumed, and the quantity of steel exported? How does it affect consumer surplus, producer surplus, and government revenue? Is it is a good policy from the standpoint of economic efficiency?
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- An increase in the demand for US goods imported into South africa will have the following impact in the South African market: The increased demand for US goods will lead to a decrease in the demand for dollars. True Falsearrow_forwardSmall Island Developing States (SIDS), particularly our Caribbean islands, are normally accused by our economists of being import dependent. Why then are we always hesitant to impose Tariffs on imports to solve our Balance of Payments problems? Why would it be slow to work on our appetites? Discuss this issue in relation to the concept of Elasticity of Demand. Also, why is the Government always imposing more and more sin taxes on alcohol and cigarettes? Is the Government so concerned about our sins when we consume these demerit goods?arrow_forwardQ53 Many people argue that the imposition of tariffs in industry X will increase factor incomes in that industry and therefore be good for the country as a whole. The counter-argument is that... a. Factor incomes would first rise and then decrease in industry X. b. The increase in industry X factor incomes would be more than offset by reductions in real incomes to all other domestic residents. c. The increase in factor incomes in industry X would reduce profits to business owners by an equal amount. d. Factor incomes overall would increase, but wages in industry X would fall, which would hurt workers in that industry. e. The increase in factor incomes would increase unemployment.arrow_forward
- Jiz What are the effects on U.S. imports and exports when the U.S. experiences economic growth stronger than its major trading partners? Multiple Choice There will be no effect on US imports and exports. U.S. exports will increase more than U.S. imports. US imports will decrease, but U.S. exports will increase. Saved US imports will increase more than U.S. exports. Note: don't use chat bot.arrow_forwardi have A-D. I only need E and the table plz (hand written plz)arrow_forwardPrice differences in “similar” products in different countries often exist. What canexplain those differences?arrow_forward
- A relatively small U.S. balance-of-trade deficit is commonly attributed to a strong demand for U.S. exports. What do you think is the underlying reason for the strong demand for U.S. exports? Cite example that prove your reasons.arrow_forward(a) Explain, using a diagram, how an increase in the demand for a country’s exports is likely to affect its terms of trade and its balance of trade. (b) Do PEDs for exports and imports come into play?arrow_forwardOnly typed answerarrow_forward
- Assume there has been an increase in the volume of exports from South Africa to the United States.1. Explain which currency appreciated and which currency depreciated. 2. Discuss the three broad functions of the government. 3. List any three cases of market failure.arrow_forward10. Which of the following is FALSE? A) Tariffs are a relatively easy tax to administer and often form an important part of revenue for low-income countries.B) Taxes on income, sales, and property require more complex accounting systems than do tariffs. C) Low-income countries often have large informal markets with the sales of many goods and services not being recorded, which makes it difficult to apply many kinds of taxes.D) Tariffs are not an attractive tax option for most low-income countries, so they mostly rely on quota licenses for revenue. i will rate. so answer correctly pleasearrow_forwardHow will the following events affect imports of a country, ceteris paribus? increase decrease no change Domestic income O level goes up Foreign income level goes up Domestic price level goes up Foreign price level goes up Exchange rate goes down (or domestic currency appreciates) O O O O O O O O O O O O O Oarrow_forward
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